That's true, but I don't think it's going to affect those at the top end as much as you seem to imply. Like ucim said, a 100% tax would certainly do this, but no one is advocating anywhere near that. Capitalism is too powerful a force to abandon entirely. But for you personally, making a decent amount of money, would you really choose not to do your job if you made 10% less? Do you really think those who are making a million dollars a year are going to stop trying to make money just because it's now $900 000 instead? Once you get into these big numbers, they're numbers. They've got enough, any extra is gravy. People will understandably be upset at the prospect of having less gravy in the future, but I don't see people (myself included) stopping wanting gravy just because there's a little less to be had.

All told, I think the one valid concern you have there is that there will be less money for investment. It's the rich who hold all the stocks, and their excess wealth will decrease. This is actually my biggest concern with this idea. I think this can be offset somewhat if the tax structure is adjusted to give a bit more burden to larger companies rather than individuals, but I'm no tax policy expert. It depends somewhat on what ends up happening with wages, particularly for those lower-end jobs. Do they have to pay more in order to get people to work those jobs, or do they have to pay less because those people are already making half of what they would have anyway (and therefore have plenty despite the lower hourly wage)? That's information I'm hoping these small scale experiments might help to give.

To address your comment about "targeted investments", I think these are fantastic. You're talking about governmental programs to do this, right? Government programs to help educate and retrain and assist those looking for work? I am strongly in favour of programs like that, and if we actually had enough of them, they would alleviate most of the need for a UBI (there are a few things like the "perverse incentives" Pfhorrest mentioned or how we could eliminate the bureaucracy of welfare qualification, but by and large we'd be good). Overall though, I expect we would disagree on what "enough" looks like. What is enough, in my opinion, is going to take pretty large sums of money to make happen. Those will need to be funded by taxes, specifically taxes on the rich, and then we're right back to your concerns about over-taxation. So I'll throw that back to you - I agree that these are awesome, but how do you fund them without "reducing the incentive to succeed" while actually giving them enough money to make sure no one is left behind?

ucim wrote:

SDK wrote:In my opinion, the coolest side-effect of the citizen's wage is that it incentivizes people to become entrepreneurs, no matter their station in life.

No, I don't see it that way. It certainly acts as an enabler for people who otherwise could not {afford to} take the risk of losing everything. But it doesn't add any incentive to do so.

I could quibble about how "enabling" something does incentivize it, but yes, you're right.

ucim wrote:Further, the income necessary varies by person, location, and situation. What do you do about somebody who needs expensive (noncovered) medical care? Or somebody whose health situation makes earning money much more difficult than her neighbor? Or somebody who lives in an expensive area - do they get more money (i.e. an amount based on local cost-of-living)? So, despite the pretty wrapping, UBI is not at all a panacea, and even if implemented, there will be calls for need-based aid on top of it. So that bureaucracy won't go away.

"I'm from Canada" would be my simple answer to your healthcare concerns. Otherwise, I'm inclined to make it a flat rate regardless of where you live, but people smarter than me can look at what that might require as far as people needing to migrate. What I would expect to see would be a state (or provincial) portion to the UBI, where more wealthy states can increase the UBI for their citizens, helping to relieve the increased land prices that go along with living in a wealthy area.

SDK wrote:Sorry if I missed it, but I didn't see you explain that at all. I saw you state it, but I would like you to back that up. It seems to me that any upward pressure on prices would be either temporary or not significant enough to prevent people from living off that wage.

Or maybe you're talking about your gentrification example? Yes, it's true that rent may be prohibitively expensive in certain areas for those who either choose to or are forced to live on the UBI alone. That may be a problem for those individuals, but that problem already exists and is not something that's going to go away, UBI or no. Land prices are something else entirely since there actually is a limited supply. That is not the case for... basically any other product. You already conceded that food prices likely wouldn't be greatly affected, right? Do you still believe that something like electricity or phones will be?

Land (and thus rent) will certainly have the increases due to limited supply as you said. Electricity and phones or anything else requiring large infrastructure presumably will too. There's no perfect competition there to provide relief. Building a cell network is too expensive so we're already at their mercy in terms of pricing. If everyone suddenly had $10k more, raising the prices would be a pretty logical move on their part since the risk of someone undercutting them is low.

Now Pfhorrest's point about making it so that it only gave more money to the poor (by having it be neutral at mid income levels) may actually serve to reduce some of this upwards price pressure. But then you're basically just re-adjusting the welfare system anyways and that's subtly different than a UBI IMO. I mean you could still tout it as one, but if everyone above middle income is losing income (due to higher taxes) it's pretty disingenuous to imply it's helping everyone. Still that's probably the most workable method. I kinda wonder if its necessary or not. A smooth reduction in welfare with respect to income would do that as well, instead of the current cliffs we have.

SDK wrote:"I'm from Canada" would be my simple answer to your healthcare concerns. Otherwise, I'm inclined to make it a flat rate regardless of where you live, but people smarter than me can look at what that might require as far as people needing to migrate. What I would expect to see would be a state (or provincial) portion to the UBI, where more wealthy states can increase the UBI for their citizens, helping to relieve the increased land prices that go along with living in a wealthy area.

Even within provinces there are huge discrepancies in cost of living. A $20k UBI is going to be completely different in terms of what I can do with it if I live in Kuujjuaq vs Montreal. Hell it'll be a huge difference if I live in downtown Montreal vs 45 minutes out just on the edge of the island. This is more of an issue if you want to make it a "living wage" for everyone rather than just an extra welfare subsidy. Any type of universal income scheme is going to run into cost of living differences, regardless of which way you do it. Give everyone the low amount and some people can't survive on it. Give everyone a high amount and the people in some areas get ridiculously more bang for their buck. Adjust it depending on the cost of living of the area and you'll drive people into the already crowded areas to get more money.

The areas that you can buy a lot more will end up going up in price as demand for property goes up, while the areas that you can buy a lot less will go down in price as everyone moves out. Reducing income inequality nationally should cause the cost of living differences to shrink by a large amount; the market will just reach a new equilibrium.

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

Thesh wrote:The areas that you can buy a lot more will end up going up in price as demand for property goes up, while the areas that you can buy a lot less will go down

This effect is independent of a UBI. It supposedly happens anyway. But we still have the issue in spades. So, no.

Jose

Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

I'm saying that I don't buy the argument that the UBI will cause the cost of living to even out across the country. The very pressures that cause this (supply and demand) have had hundreds of years to do this, and it hasn't happened. There are reasons that areas are desirable or undesirable; those reasons will stay the same. Sure, supply and demand is one of those reasons, but the UBI isn't going to affect that much, and it's not going to affect the other reasons at all.

Jose

Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

Chen wrote:Now Pfhorrest's point about making it so that it only gave more money to the poor (by having it be neutral at mid income levels) may actually serve to reduce some of this upwards price pressure. But then you're basically just re-adjusting the welfare system anyways and that's subtly different than a UBI IMO. I mean you could still tout it as one, but if everyone above middle income is losing income (due to higher taxes) it's pretty disingenuous to imply it's helping everyone.

I don't see how any UBI could possibly do otherwise. Under any UBI, everyone gets the same amount of money, but then that money has to come from somewhere. If it comes from everyone equally, then you've done nothing in the end and there's no point. Any funding method that wouldn't just negate the point would end up taking more from the rich than from the poor, meaning at some threshold rich enough people are paying more than they're getting, somewhere below that the two cancel out, and everywhere below that sees some net benefit. It still benefits everyone inasmuch as everyone is guaranteed never to have their income drop below the basic minimum, which is where the name comes from.

SDK wrote:To address your comment about "targeted investments", I think these are fantastic. You're talking about governmental programs to do this, right? Government programs to help educate and retrain and assist those looking for work? I am strongly in favour of programs like that, and if we actually had enough of them, they would alleviate most of the need for a UBI (there are a few things like the "perverse incentives" Pfhorrest mentioned or how we could eliminate the bureaucracy of welfare qualification, but by and large we'd be good). Overall though, I expect we would disagree on what "enough" looks like. What is enough, in my opinion, is going to take pretty large sums of money to make happen. Those will need to be funded by taxes, specifically taxes on the rich, and then we're right back to your concerns about over-taxation. So I'll throw that back to you - I agree that these are awesome, but how do you fund them without "reducing the incentive to succeed" while actually giving them enough money to make sure no one is left behind?

Yes, I'm talking about government funded programs (though, not necessarily federal government programs). I don't think the impact to capitalistic motivations will be as severe because it requires less of an increase in taxation to fund it. The funding needed for this approach to be effective is far less than what it would take to have an effective UBI. Even if you spent the same $15-20k/year per recipient of the targeted programs (which is likely a gross overestimate as those in need of one program may not have use for others), the overall costs would be far lower since only those who need the assistance get it and the money is spent efficiently to achieve the desired objective. The numbers I'm thinking of are a net tax increase for people in a similar situation to me of roughly 5-10% for the targeted approach while it'll take more like an additional ~20-30% net increase to fund a UBI.

Although, in my preferred world, most of these programs would exist at the state and local level with only the truly universal needs addressed by the federal gov. That way, if Massachusetts wants to implement a UBI and single payer health care with a 70+% top tax rate, they are free to do so. And in my home state of Arizona, we can try private medicine with a more open market for insurance, lower taxes and targeted assistance programs along with promotion of charitable contributions. There's no reason that we need to have a single solution for every problem across such a diverse population.

Pfhorrest wrote:I don't see how any UBI could possibly do otherwise. Under any UBI, everyone gets the same amount of money, but then that money has to come from somewhere. If it comes from everyone equally, then you've done nothing in the end and there's no point. Any funding method that wouldn't just negate the point would end up taking more from the rich than from the poor, meaning at some threshold rich enough people are paying more than they're getting, somewhere below that the two cancel out, and everywhere below that sees some net benefit. It still benefits everyone inasmuch as everyone is guaranteed never to have their income drop below the basic minimum, which is where the name comes from.

Maybe its just a matter of scale then. If the people who are making median income are not making anything from it, I find it hard to see how it will be enough to raise the poor up to a level they can live on. Is there really a functional difference than just increasing the amount of welfare and getting rid of any of the cliffs involved? I mean I guess in practice that's exactly what it is...

FWIW under my proposal the neutrality point is the mean income, not the median income, and right now the mean income is about twice the median income, and around the 75th percentile. (i.e. half of individuals currently make under around $25k, but the mean personal income is about $50k, and about 75% of individuals make under that $50k). Given that income distribution, if we set the UBI to half the mean income, then everybody would be guaranteed to make at least what is currently the median income; the whole bottom two quartiles would be squeezed up into the income ranges of the current third quartile (and the current third quartile would be squished into the top of that current third quartile range, too).

Chen wrote:Maybe its just a matter of scale then. If the people who are making median income are not making anything from it, I find it hard to see how it will be enough to raise the poor up to a level they can live on. Is there really a functional difference than just increasing the amount of welfare and getting rid of any of the cliffs involved? I mean I guess in practice that's exactly what it is...

The lack of means testing is the big difference. I do not like the idea of a politically-determined UBI or welfare, personally, just because it is based on what you can argue people deserve* but I prefer a UBI because then it's a lot harder to take away, especially as the majority of people would benefit (generally those making below mean, not median, income).

*In a world where everything can be produced without labor, how much do people deserve if they don't own property?

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

Thesh wrote:So your argument is that a UBI wouldn't make cost of living more equal because a lack of a UBI doesn't make cost of living more equal?

He's saying it's independent of UBI. Certain areas cost more to live in than other areas. If all land is equal, supply and demand states that people should move elsewhere, to where the land is cheaper. That doesn't happen now, and it still wouldn't happen with UBI around. I agree with ucim on that - I don't see how a UBI would change inequalities in cost of living.

That's not the goal of UBI, so it's fine, but it would need to be addressed in some fashion for the UBI to work as intended (for example, if I'm living in a high-cost city and fear losing my job, a flat-rate UBI won't make me feel very secure).

slinches wrote:Yes, I'm talking about government funded programs (though, not necessarily federal government programs). I don't think the impact to capitalistic motivations will be as severe because it requires less of an increase in taxation to fund it. The funding needed for this approach to be effective is far less than what it would take to have an effective UBI. Even if you spent the same $15-20k/year per recipient of the targeted programs (which is likely a gross overestimate as those in need of one program may not have use for others), the overall costs would be far lower since only those who need the assistance get it and the money is spent efficiently to achieve the desired objective. The numbers I'm thinking of are a net tax increase for people in a similar situation to me of roughly 5-10% for the targeted approach while it'll take more like an additional ~20-30% net increase to fund a UBI.

I tried to quickly find how much of the cost of welfare is spent on ensuring people qualify, but couldn't do so easily (and I've got to get to work - maybe later). It's certainly a significant portion of the budget though. The process people have to go through, and the layers of social workers required to do all that paperwork, adds up to a lot of time and money spent. I assume the numbers 5-10% that you're throwing out there are guesses, but even so, once you take into account the eligibility requirements to qualify for these programs, it's going to be significantly more than that. To be clear though, I am totally 100% on board with increasing taxes to pay for this kind of thing, and if those people crunching the numbers (which I have not done) find it to be as effective and more efficient than a UBI, then great! I have my doubts on both those points, however (but admit that I would need to do more proper research to make a real decision).

PEDIT:

Thesh wrote:*In a world where everything can be produced without labor, how much do people deserve if they don't own property?

While that might happen in the not-too-distant future, you're getting pretty far ahead of yourself there.

You make arguments for why the Netherlands doesn't do that today, but if it's all to fund a UBI those points are fairly irrelevant; sure medical and government are taxed, but everyone gets a rebate equal to the amount increased per person, so they can afford it.

I can't follow you here. My points are not very specific to the Netherlands- most apply to every place with a VAT. Taxing the government does not generate revenue anywhere else either.

If you want to raise 20% of GDP, then this requires a VAT rate in the neighbourhood of 50%. Somewhat less if the public sector is smaller, but in that case you need a larger UBI for the same social effects. 20% of GDP would not pay for much of a UBI here, if all spending was taxed by a substantially higher VAT. If people had to buy private health insurance and education on top of that, you'd need substantially more than 20% of GDP to provide a livable UBI.

Such taxation, through VAT or other means, is not impossible. Though it would be unprecedented. But talking about a 25% VAT rate is misleading.

Thesh wrote:So your argument is that a UBI wouldn't make cost of living more equal because a lack of a UBI doesn't make cost of living more equal?

He's saying it's independent of UBI. Certain areas cost more to live in than other areas. If all land is equal, supply and demand states that people should move elsewhere, to where the land is cheaper. That doesn't happen now, and it still wouldn't happen with UBI around. I agree with ucim on that - I don't see how a UBI would change inequalities in cost of living.

I don't understand; are you saying that the desirability of the land is absolute? Property prices are strongly linked to incomes, even when accounting for all of that. When you significantly change the distribution of income, expect the relative price of every single good and service in the economy to change as the demand for every single good and service in the economy changes.

Taxing the government does not generate revenue anywhere else either.

No, but it requires you to raise more money because you have to pay out a percentage to everyone. It's equivalent to passing a law that says for every $4 in government consumption and investment, you must pay $1 to the public as a citizen's dividend.

you want to raise 20% of GDP, then this requires a VAT rate in the neighbourhood of 50%.

If you tax the value added of all production, then you need a flat 25% VAT to raise 20% of GDP. The reason that the Netherlands and other countries don't see that is because they do not tax all production.

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

Thesh wrote:So your argument is that a UBI wouldn't make cost of living more equal because a lack of a UBI doesn't make cost of living more equal?

He's saying it's independent of UBI. Certain areas cost more to live in than other areas. If all land is equal, supply and demand states that people should move elsewhere, to where the land is cheaper. That doesn't happen now, and it still wouldn't happen with UBI around. I agree with ucim on that - I don't see how a UBI would change inequalities in cost of living.

I don't understand; are you saying that the desirability of the land is absolute? Property prices are strongly linked to incomes, even when accounting for all of that. When you significantly change the distribution of income, expect the relative price of every single good and service in the economy to change as the demand for every single good and service in the economy changes.

Oh! Is that what you're saying? To put it in terms of money then, we can generally assume that land prices will be higher where the economy is stronger. You're saying that we're going to flatten that out by reducing incomes of those on the higher end, right? But what that really means is that you're hurting the economy of those locations enough (the people who live there lose enough of their income) that land prices go down (the economy is poor, so people move out), meeting in the middle as cheap places attract those who suddenly have disposable income thanks to the UBI. Right?

I guess that you and I would also disagree with what is "enough" then (but in the opposite way as slinches and me). I do not want to stop capitalism by implementing a UBI. There will still be places with stronger economies and therefore higher land prices. That's not a problem to me. Capitalism does have a lot of benefits, and we're not ready to forget about that quite yet.

Correct me if I made too many assumptions with what you were trying to say.

SDK wrote:I tried to quickly find how much of the cost of welfare is spent on ensuring people qualify, but couldn't do so easily (and I've got to get to work - maybe later). It's certainly a significant portion of the budget though. The process people have to go through, and the layers of social workers required to do all that paperwork, adds up to a lot of time and money spent. I assume the numbers 5-10% that you're throwing out there are guesses, but even so, once you take into account the eligibility requirements to qualify for these programs, it's going to be significantly more than that. To be clear though, I am totally 100% on board with increasing taxes to pay for this kind of thing, and if those people crunching the numbers (which I have not done) find it to be as effective and more efficient than a UBI, then great! I have my doubts on both those points, however (but admit that I would need to do more proper research to make a real decision).

My 5-10% numbers are an educated guess. I based them on the assumption that we already have the administrative infrastructure in place for existing need based programs, so any increases in administrative overhead for the expanded programs are marginal.

SDK wrote:Oh! Is that what you're saying? To put it in terms of money then, we can generally assume that land prices will be higher where the economy is stronger. You're saying that we're going to flatten that out by reducing incomes of those on the higher end, right? But what that really means is that you're hurting the economy of those locations enough (the people who live there lose enough of their income) that land prices go down (the economy is poor, so people move out), meeting in the middle as cheap places attract those who suddenly have disposable income thanks to the UBI. Right?

So the effect that you are not looking at is the effect of jobs on both property prices and people's decision to move. One reason that people are living in expensive areas is because expensive areas are where the income is; however, people make those decisions based on many factors, and when the potential for income in an area goes down, there is less reason to move there. Both of those effects, less money for the people who live there and less incentive to move there, will contribute to evening out the property prices.

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

Thesh wrote:So the effect that you are not looking at is the effect of jobs on both property prices and people's decision to move. One reason that people are living in expensive areas is because expensive areas are where the income is; however, people make those decisions based on many factors, and when the potential for income in an area goes down, there is less reason to move there. Both of those effects, less money for the people who live there and less incentive to move there, will contribute to evening out the property prices.

Why are we assuming the potential for income is going to go down in areas where it is currently high? The idea (or hope) would be that a UBI doesn't negatively impact the workforce (much) since people will want more than the minimum. If it does suddenly cause a drastic shift from working to non-working you're going to have a hell of a time keeping it funded.

Because when you increase taxes on all economic activity equally and pay it out equally and unconditionally to every citizen, then every state with above average income sees its income go down, while every state with below average income sees its income go up. If it doesn't give more income to poor people and less income to rich people, then it's a bit pointless.

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

thesh wrote:So your argument is that a UBI wouldn't make cost of living more equal because a lack of a UBI doesn't make cost of living more equal?

SDK got it. They're orthogonal.

Yes, the (local) economy is one factor in people's decision on where to live. It's not the only one, it may not even be the biggest one, and its effect is indirect and unevenly spread. Hysteresis is also a big factor; it costs quite a bit to move. Other factors include schools, recreation and culture, infrastructure (or wilderness), social ties, climate, political climate, lots of things.

In any case, the effect of the economy on housing prices already exists, and yet housing prices have not evened out. I claim that there is nothing in a UBI that would change this. Housing prices will be subject to the same other factors, and it will still cost a lot to move, both economically and socially.

I don't see how a UBI would have a significant effect on this.

What I do see is how a UBI would have a significant effect on the cost of low-end labor, and on all goods that depend on this. (Countering this is automation, which is one of the reasons a UBI is being advanced, but it's not at all clear what the path of automation will be).

Jose

Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

ucim wrote:Yes, the (local) economy is one factor in people's decision on where to live. It's not the only one, it may not even be the biggest one, and its effect is indirect and unevenly spread. Hysteresis is also a big factor; it costs quite a bit to move. Other factors include schools, recreation and culture, infrastructure (or wilderness), social ties, climate, political climate, lots of things.

Ah, so it's how much can you make, how well maintained your infrastructure is, how much you spend on improvements, crime rates... All things strongly linked to income.

ucim wrote:In any case, the effect of the economy on housing prices already exists, and yet housing prices have not evened out. I claim that there is nothing in a UBI that would change this. Housing prices will be subject to the same other factors, and it will still cost a lot to move, both economically and socially.

So everyone lives exactly where they want to live, and they wouldn't want to move if their income changed significantly?

Let's say one area had housing prices equal to 50% of income, and then income was cut in half. Would you expect housing prices to remain the same?

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

Thesh wrote:So everyone lives exactly where they want to live, and they wouldn't want to move if their income changed significantly?

It's not a binary thing. Yes, there would be an equalizing effect for reasons you've explained, but the strength of that effect is uncertain.

Say you live in Nowhere, Kansas, and moving to L.A. today would cause a 100% increase in your cost of living. Then we implement a UBI, and this has an equalizing effect on prices. Now moving to L.A. only causes a 90% increase in your cost of living. Yeah, they're more equal than they used to be, but in this hypothetical it doesn't amount to that big a change.

Thesh wrote:Because when you increase taxes on all economic activity equally and pay it out equally and unconditionally to every citizen, then every state with above average income sees its income go down, while every state with below average income sees its income go up. If it doesn't give more income to poor people and less income to rich people, then it's a bit pointless.

The magnitude of the effect is what's important here, as mentioned in the previous posts. You still have better access to services and better job opportunities in big cities compared to out in the country and thus the cost of living will still remain higher there.

No. Some things partially related to income, but not causally so. Your taste in music won't change just because you got a package of money that can take you out of poverty. Yes, over time you may get to experience more different kinds of music, and may come to appreciate other genres that you would not have otherwise, but money won't give you the desire to do so, and listening to music (of any kind) is already pretty much free. Giving everyone a package of money isn't likely to change most people's family relationships (if it does, there's not much there to begin with), and it's not likely to change one's preference for outdoor or city living. Maybe it alters your political stance a bit, but would it change your views on abortion? Religion? Sexual repression?

Those are all factors in choosing where one wants to live.

Jose

Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

Yes we're talking about a sufficient amount of money to let people survive without working. That's a long cry from living a super comfortable life without any wants. People are going to continue to want to work to make more money. I mean the whole system doesn't work if it somehow lets everyone not work and live as comfortably as they want, barring magic star trek like replicators and near unlimited energy.

I'm not sure how this minimum sustainable amount of money is suddenly going to completely change the cost of living in cities vs out in the country such that they become equivalent.

No, but it requires you to raise more money because you have to pay out a percentage to everyone. It's equivalent to passing a law that says for every $4 in government consumption and investment, you must pay $1 to the public as a citizen's dividend.

Sure, but that $1 will come from taxes. If you're only doing a VAT, then this means a higher VAT rate, which is exactly my point...

Another factor is that GDP double-counts capital expenditures (that's what the G means). The price of a new machine is counted in GDP for year 0, then the sales price of the widgets from the machine get counted in GDP for year 1 to 10. Even though the cost of the machine is amortized in the price of the widgets. When when the machine is scrapped in year 11, it's depreciation is only counted in NDP, not GDP.

VAT only taxes the widgets, which indirectly taxes the machine once. If you were to follow the GDP accounting style for taxation, you'd also tax the machine separately. This would double-tax capital expenditures relative to other business expenditures, hardly a good policy.

Last (minor) factor is that VAT taxes business capital through its products, and therefore with a delay. If the capital stock is rising, then VAT revenue slightly lags production.

Zamfir wrote:Sure, but that $1 will come from taxes. If you're only doing a VAT, then this means a higher VAT rate, which is exactly my point...

No, the VAT that is slated for UBI is 25% flat - the government can't use that for themselves; think of it as having a supergovernment that taxes the government. To actually pay for the government consumption and investment, you can raise taxes however you want; the VAT tax is paid consumption and investment, not revenue. If you want that to be another VAT, so be it, but at the very least there should be capital gains and estate taxes. I used VAT for simplicity for the sake example, so I'm not really interested in the political aspects of that.

ucim wrote:

Thesh wrote:All things strongly linked to income.

No. Some things partially related to income, but not causally so. Your taste in music won't change just because you got a package of money that can take you out of poverty. Yes, over time you may get to experience more different kinds of music, and may come to appreciate other genres that you would not have otherwise, but money won't give you the desire to do so, and listening to music (of any kind) is already pretty much free. Giving everyone a package of money isn't likely to change most people's family relationships (if it does, there's not much there to begin with), and it's not likely to change one's preference for outdoor or city living. Maybe it alters your political stance a bit, but would it change your views on abortion? Religion? Sexual repression?

Those are all factors in choosing where one wants to live.

Jose

At this point you are just flat-out dismissing the idea that demand for any good or service is linked to how much money people have to spend, which is preposterous.

Chen wrote:Yes we're talking about a sufficient amount of money to let people survive without working. That's a long cry from living a super comfortable life without any wants. People are going to continue to want to work to make more money. I mean the whole system doesn't work if it somehow lets everyone not work and live as comfortably as they want, barring magic star trek like replicators and near unlimited energy.

I'm not sure how this minimum sustainable amount of money is suddenly going to completely change the cost of living in cities vs out in the country such that they become equivalent.

I said "We are talking enough money to take nearly everyone out of poverty" not "Everyone will be able to get everything that they want". Even with that, I don't think you are grasping the scale of what we are talking about.

If you are talking 20% of the GDP, than you are talking $11,500 per person in the US. The bottom 20% of households (not individuals) in the US made an average of $13,000 in 2016, and the bottom 20% of black households averaged $7,500. Not only would every single one of those people make more money, but median income would also go up while most of the income lost will be above-average earners, which only the top 20% of households make above mean income.

Thesh wrote:If you are talking 20% of the GDP, than you are talking $11,500 per person in the US. The bottom 20% of households (not individuals) in the US made an average of $13,000 in 2016, and the bottom 20% of black households averaged $7,500. Not only would every single one of those people make more money, but median income would also go up while most of the income lost will be above-average earners, which only the top 20% of households make above mean income.

From those numbers alone I'm not sure how you can think that there would be a huge shift in land prices. The mean income stays the same (hopefully), while the median rises. That doesn't mean there won't still be huge outliers. We want these outliers to some extent - we need them to pay for our UBI. At that point, it's just a fact of economics that many of those outliers are going to live in the same areas which is going to maintain large inequality in land prices.

There will be a shift, but it's not going to be a big one. If it is, either we've just ushered in the utopia, or UBI has failed.

Thesh wrote:At this point you are just flat-out dismissing the idea that demand for any good or service is linked to how much money people have to spend, which is preposterous.

No. I'm flat-out dismissing the idea that demand for goods and services is dependent solely on how much money people have to spend, which is a preposterous idea. I maintain that the UBI by itself is not sufficient to equalize, or even seriously affect, the distribution of housing prices.

Jose

Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

SDK wrote:From those numbers alone I'm not sure how you can think that there would be a huge shift in land prices. The mean income stays the same (hopefully), while the median rises. At that point, it's just a fact of economics that many of those outliers are going to live in the same areas which is going to maintain large inequality in land prices.

Just from the huge shift in demand for goods and services, land prices will change, and the demand for jobs are going to change. I mean, you are talking completely changing the entire economic landscape of the country, giving workers much more bargaining power as they don't need the job to live, significantly changing crime rates, the need for government services, investment in rich and impoverished communities. The demand for every single good and service will change, along with the jobs that they employ - some businesses will close, others will open, some shipping routes become busier, some less so; there is absolutely no reason at all to expect any relative pricing levels to remain when you are talking completely changing the distribution of income.

That doesn't mean there won't still be huge outliers. We want these outliers to some extent - we need them to pay for our UBI.

You can fully fund a UBI with any level of inequality, it's just that a UBI with zero inequality is a wash.

ucim wrote:

Thesh wrote:At this point you are just flat-out dismissing the idea that demand for any good or service is linked to how much money people have to spend, which is preposterous.

No. I'm flat-out dismissing the idea that demand for goods and services is dependent solely on how much money people have to spend, which is a preposterous idea. I maintain that the UBI by itself is not sufficient to equalize, or even seriously affect, the distribution of housing prices.

Jose

No one is claiming that. You are claiming that how much money people have is a negligible part of people's decision making when it comes to how they spend.

It has been shown that a linear relationship exists between income and house price quantiles for Sydney, Houston and Texas. Such is the strength of the relationship that we suspect that it may hold more generally for other cities and states. We have shown how such a linear relationship can arise from a variant on the permanent income hypothesis. If our finding proves to be robust, it has some interesting implications for our understanding of the housing market. Most significantly, it implies that the house price distribution is more or less independent of the quality of the housing stock itself. Rather, the house price distribution seems to be determined directly from the income distribution via a location-scale transformation which depends on conditions in the mortgage market, and other factors such as demographics and supply constraints. This finding should help inform future discussion on the evolution of house prices.

This explains how housing prices are determined:

One important implication of our results in Tables 2, 3 and 4 is that housing characteristics only affect house prices to the extent that they affect a house’s relative position in the overall ordinal ranking of houses (assuming preferences are sufficiently homogeneous across the population to allow the construction of such a ranking). For example, if a house acquires an extra 100 square meters of land, it rises in price because it moves up in the ordinal ranking of houses. The actual increase in price is then determined from the income distribution.

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

thesh wrote:You are claiming that how much money people have is a negligible part of people's decision making when it comes to how they spend.You are claiming that how much money people have is a negligible part of people's decision making when it comes to how they spend.

No, I am claiming that an increase of one BIU ("basic income unit", the amount that the UBI would give people) isn't going to erase real estate inequality.

Your statement here (in response to the issue that one BIU will have a greater effect in areas with lower cost of living) is just a statement of supply and demand. I don't disagree with it, I just don't think it's relevant. You state it as if it's the solution to the issue; I take issue with that. I do not see how giving out one BIU to people will significantly equalize cost of living (which is more than just cost of real estate) across the nation. That issue will remain an issue. It does not self-erase.

Jose

Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.

I think a UBI would do a lot to depopulate cities and spread people out across the country by changing the demand (changes in priorities would create giant shifts in Thesh's ordinal housing rankings). For example, if I had access to a small but liveable income regardless of whether I work, I would sell my house and buy a nice simple place in a remote part of Wyoming and backpack in the Tetons all summer for the rest of my life. There are probably others who would like to do something similar.

thesh wrote:You are claiming that how much money people have is a negligible part of people's decision making when it comes to how they spend.You are claiming that how much money people have is a negligible part of people's decision making when it comes to how they spend.

No, I am claiming that an increase of one BIU ("basic income unit", the amount that the UBI would give people) isn't going to erase real estate inequality.

Where did I claim it would erase real estate inequality?

ucim wrote:Your statement here (in response to the issue that one BIU will have a greater effect in areas with lower cost of living) is just a statement of supply and demand. I don't disagree with it, I just don't think it's relevant. You state it as if it's the solution to the issue; I take issue with that. I do not see how giving out one BIU to people will significantly equalize cost of living (which is more than just cost of real estate) across the nation. That issue will remain an issue. It does not self-erase.

Jose

I don't state it's a solution, I state that the market will reach a new equilibrium that takes into account the UBI, and there is no real reason to worry about regional differences in cost of living when it comes to the UBI.

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

Thesh, is your thesis that UBI will actively help with real estate inequality, or just that it won't make that situation worse (and so real estate inequality makes no argument against UBI)?

And if the former, let me ask you a personal example to see if I understand what market forces you're saying will apply. I live in a very expensive area (owning housing is virtually unattainable for me, around the 75th percentile nationally -- as I said, I live in a trailer here), but the median income is quite low (much lower than even mine), though basically anyone who actually owns real estate here is a multimillionaire, because you have to be. Are you suggesting that the redistributive effects of an UBI will make those rich landowners here decide to move elsewhere as it suddenly gets harder for them to live here on their reduced effective incomes, which will lower the demand and thus price of housing here, while the UBI also boosts the incomes of the poorer people here (who are already living here despite not having been able to afford it before), which together will make it more affordable for them (and people near the mean like me) to live here?

I'm suggesting it will reduce real estate inequality, and because of market forces the overall cost of living difference will reach an equilibrium where there is no real reason to have a regionally adjusted UBI, and that attempting to do so will result in a larger gap than an equal UBI due to those same market forces.

And if the former, let me ask you a personal example to see if I understand what market forces you're saying will apply. I live in a very expensive area (owning housing is virtually unattainable for me, around the 75th percentile nationally -- as I said, I live in a trailer here), but the median income is quite low (much lower than even mine), though basically anyone who actually owns real estate here is a multimillionaire, because you have to be. Are you suggesting that the redistributive effects of an UBI will make those rich landowners here decide to move elsewhere as it suddenly gets harder for them to live here on their reduced effective incomes, which will lower the demand and thus price of housing here, while the UBI also boosts the incomes of the poorer people here (who are already living here despite not having been able to afford it before), which together will make it more affordable for them (and people near the mean like me) to live here?

I'm suggesting that the rich person will not be able to sell their house for as much, because fewer people can afford it. Housing that is currently purchased by low income individuals will go up, as more people can afford more. Further, the UBI will make some currently high crime areas lower crime and more desirable, lowering demand for houses elsewhere. And so on and so forth.

The rage in their eyes, torches in their handsAnd the power of the cross bringing fear to all the landAnd darkness will come to us all.

Lots of places, though not always explicitly, and not specifically about real estate inequality but about cost of living inequality. How about here, just above this post:

Thesh wrote:I'm suggesting it will reduce real estate inequality, and because of market forces the overall cost of living difference will reach an equilibrium where there is no real reason to have a regionally adjusted UBI, and that attempting to do so will result in a larger gap than an equal UBI due to those same market forces.

(emphasis mine)

Thesh wrote:Further, the UBI will make some currently high crime areas lower crime and more desirable...

Only to the extent that crime is caused by low income. There's a correlation perhaps (and perhaps not), but I'm not convinced it's a causation.

Jose

Order of the Sillies, Honoris Causam - bestowed by charlie_grumbles on NP 859 * OTTscar winner: Wordsmith - bestowed by yappobiscuts and the OTT on NP 1832 * Ecclesiastical Calendar of the Order of the Holy Contradiction * Please help addams if you can. She needs all of us.